Professional networking giant LinkedIn Corp (NYSE:LNKD) has reached an agreement with approximately 800,000 people on a class-action lawsuit where it was being accused of failing to live to its word on protection of personal information. People who had paid for the premium service had accused the company of failing to use strong security measures to protect their personal information as initially agreed.
A file containing 6.5 million encoded LinkedIn Corp (NYSE:LNKD) user password was paraded on a Russian hacker site in 2012 after a hack attack, consequently prompting the class action lawsuit. It is alleged that hackers gained access to the actual passwords as they were protected by a weak form of security. LinkedIn Corp (NYSE:LNKD) with 160 million users at the time was consequently forced to improve on its security measures although it advised all its users to change their passwords.
Despite the hack, it never appeared that the breach had caused any damage to the customers that were paying extra, but in the class action lawsuit they argued the company had deceived them about the level of security. The settlement is not expected to result in any financial gains to the plaintiffs as after the deduction of lawyers’ fees; the 800,000 affected users are expected to share the remaining $1.25 million which works to about $1.25 per user.
LinkedIn Corp (NYSE:LNKD) in a statement has confirmed that it had agreed to the settlement to avoid any other distraction or expense on an ongoing litigation.
The case does not mark the end of the networking site’s legal tussles. The company is also in the process of settling a case involving its practice of scanning email contact lists of its users and sending repeated emails for them to join the platform.
LinkedIn Corp (NYSE:LNKD) has already notified a Federal District Court judge Lucy Koh that it has accepted a mediator proposed settlement according to a number of sources. Details of the proposal are to be filed in court by March 24.
